Building a Cyber Security Company from Israel: Aki Eldar, CEO of Secure Islands (Part 5)

Sramana Mitra: I’m going to switch the line of questioning a little bit to the story of your entrepreneurial story. Let’s go back to eight years ago when you and your brother left your respective jobs to start this company. You both had deep experience in the security domain. You went and talked to Shlomo to get his validation and he resoundingly endorsed it. Did he offer you financing?

Aki Eldar: He invested.

Sramana Mitra: How did you start things off?

Aki Eldar: In Israel, there is a program which is led by the Office of the Chief Scientist. It’s part of the Economic Ministry of the Israeli government. This is a special program for startups where the government combines forces with the private industry and chooses different private entities to run incubators. 85% of the financing comes from the government and only 15% comes from the private sector. The private sector is the one that’s running the incubators. It’s a private incubator with government support.

Sramana Mitra: So you had funding from this incubator?

Aki Eldar: Yes. We founded the company as part of the incubator program. At the same time, we raised two times from the government support. Instead of raising only the incubation financing, we raised double the money. The funds came from the owner of the incubator. After two years, we graduated from the incubator. A year before, Shlomo joined as an investor. After about another year, we raised additional funds from another private investor.

Sramana Mitra: Can you step me through the milestones that you were able to accomplish as you were going through the different rounds of financing? The incubator got you going and you started developing the product or did you do some other kind of customer validation upfront?

Aki Eldar: We did a customer validation for about a year before we founded the company. We went to a lot of organizations in Israel and also outside of Israel. We validated the need. We also, in a way, presented the idea without getting too much into details because we wanted to keep our secret. We understood that the problem is huge. The current solutions are going in one direction where we believe it will never prevail. We believe that there is a new direction that the market needs to take.

This was, more or less, at the time that the subprime disaster started – at the end of 2008 and beginning of 2009. The market closed. It was impossible to raise money. Nobody bought anything. This is part of the entrepreneur’s journey. You must be persistent. You must believe in the cause but at the same time, you need to ask a lot of questions. If you’re going in the wrong direction, leave it. Don’t continue. If you believe this is the right direction although you’re asking so many questions in order to validate the goal, continue and don’t leave it. That is what we did.

Although all doors were closed, we were able to validate our journey and we were able to convince our investors to continue to support the company. There are times when nothing belongs to the company itself. It belongs to the market and the sentiment. Lehman Brothers went bankrupt. Who would think of such a thing?

In 2010, we were able to penetrate our first international customer. We were the only company in the world who knew how to solve the problem of the customer, which combined classification and protection without hindering the business process and without the need to do integration. This customer was Credit Suisse.

Sramana Mitra: That’s a big customer.

Aki Eldar: Yes, we won.

This segment is part 5 in the series : Building a Cyber Security Company from Israel: Aki Eldar, CEO of Secure Islands
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